Japanese auto sales plummeted 11.4% in April from a year ago, an industry group said Thursday, highlighting the impact of a sales tax rise which sparked a mad dash to stores ahead of the levy hike.
The drop marked the first fall in eight months, with sales of new cars, trucks and buses totaling 188,864 vehicles, the Japan Automobile Dealers Association said.
The Japanese auto market—the world’s third largest behind China and the United States—had been enjoying double-digit sales increases in recent months as shoppers snapped up big-ticket items before the April 1 tax rise to 8% from 5%.
The tax rise was Japan’s first in 17 years, a move seen as key to taming its huge national debt but one which aggravated fears that a drop in consumer spending would dent the economy.
Automobile sales are expected to continue to fall due to the tax hike. Big ticket items have fallen in sales across the board as consumers are unwilling to spend as uncertainty persists as to whether the economy will improve or worsen as the year goes on. Many economists like Robert Shiller and Kenichi Ohmae predict that Abe's third arrow of international expansion of the Japanese economy has yet to leave the quiver.
Abe failed to negotiate a TPP success, Germany while receptive of Abe's visit is uncertain to the success Germany will have in any deal with Japan, as it would have to include the other EU nations, and with Japan's past of reneging on trade terms in the past, the EU is unlikely to enter any agreement with Japan that there are not clear penalties for breaking agreement terms.
While Abe is being warmly received in Europe, it is unclear if any trade terms will be acceptable to EU policy makers. Some in Germany were receptive, but in the UK and Portugal trade discussions were not even held due to trade policy not being on the host's agendas.
In the UK discussions focused primarily on Prime Minister David Cameron wanting clarity on Abe's wish to change Article 9 of Japan's constitution. In Portugal talks are more focused on the treatment of Brazilian Nikkeijin and what Abe plans to make Japan more just and open to immigration.